When a person files a consumer proposal, their creditors get 45 days to vote on the terms. During this 45 day process, the creditors will make one of the following decisions:
- Accept the proposal as is (this means they accept the amount of the payment and the length of the term of payments)
- Reject the proposal offered
- Reject the proposal and ask for a meeting of creditors
- Do nothing
The only time the votes are counted is if a meeting of creditors is requested. A creditor gets one vote for every dollar of debt they are owed. If there is no meeting, your proposal is automatically approved. If there is a meeting of creditors, this is the only time your proposal can be rejected. This process provides a chance to talk and negotiate further with the creditors so that the terms of the proposal work for both sides, and can potentially help the consumer proposal eventually pass.
What if they vote against?
If the majority of your creditors vote against your consumer proposal, it doesn’t mean the process is over. The creditors are generally looking to make the terms better for their own cause. This means they will likely ask for more money each month. They also realize that you have the option of filing a bankruptcy. They realize if this occurs, they will likely get far less back than they would in a consumer proposal. This fact makes the negotiation important for both sides. Creditors are usually open to counter-offers so that the consumer proposal will work for both sides going forward. If the creditors do reject your consumer proposal, here are your options:
- Renegotiate the terms of your proposal.
- Withdraw the proposal and file for bankruptcy.
- Withdraw the proposal and pursue different debt relief options (like working on a plan to pay off the debt on your own).
- Withdraw the proposal and file again in the future. You can file again at any time, but it’s likely best to wait at least six months.
The best method is to ensure your consumer proposal terms are strong to start with. This will hopefully speed up the process and give you the best chance of your creditors accepting your proposal terms from the beginning. If you are struggling with your debts and looking for a way to get a fresh start, reach out to us for a free video/phone consultation. It’s a 45-minute meeting that can help you get back on your feet and moving forward without the stress of your debts hanging over you.